Crude oil futures prices fall amid hot US inflation report, Biden remarks

Crude oil futures fell in midmorning trade in Asia Feb. 11, tracking the broader financial markets lower following a volatile overnight session that saw prices pressured by a hot inflation report and remarks from US President Joe Biden pledging to curb high energy prices.

At 10:37 am Singapore time (0237 GMT), the ICE April Brent futures contract was down 30 cents/b (0.33%) from the previous close at $91.11/b while the NYMEX March light sweet crude contract fell 19 cents/b (0.21%) at $89.69/b.

Risk assets were easing in the Asian session after data showed US consumer prices beating expectations and rising by the fastest pace in 40 years.

Headline inflation came in at 7.5% in January, the US Labor Department said, while core inflation stood at 6%.

The latest print will cement views that high inflation was becoming increasingly entrenched in the economy, and will force the US Federal Reserve to move fast to tackle soaring prices, analysts said.

"The data marks a new 40-year high for US inflation and the continued outperformance in inflation readings since March 2021 translates into greater pressure for the Fed to respond aggressively ahead," said IG market strategist Yeap Jun Rong in a Feb. 11 note.

The dollar index has jumped in response to the data, rising 0.28% to 95.82 as of 0237 GMT. A stronger dollar makes it more expensive for foreign buyers to purchase dollar-denominated oil.

Investors were now pricing in a 86% probability of a 50 basis points hike in the US federal funds rate at the Fed's March 16 meeting, the CME FedWatch Tool showed as of 8:15 pm CT (0215 GMT) Feb. 10.

Market watchers also noted the latest comments from President Biden reiterating his pledge to bring energy prices lower.

"I'm going to work like the devil to bring gas prices down," Biden said Feb. 10, citing the need to increase energy supplies and boost supply chains.

The above developments saw crude prices whipsawed in the overnight session. The front-month ICE Brent crude contract had surged as much as 1.7% in the intraday session Feb. 10 before settling lower on the day by 0.15%.

Nonetheless, analysts mostly expected the near-term move for oil prices to remain upward, though any progress in the Iranian nuclear talks, as well as a further easing of tensions on the Russia-Ukraine front, could see prices pressured.

"Brent fell 0.2% overnight but remained firmly above the $90/b handle. We maintain our bullish call on oil, beyond the consolidation expected in the near-term," OCBC Treasury Research analysts said in a Feb. 11 note.